Metered Access

Crain's Detroit Business is a metered site. Print and digital subscribers have unlimited access to stories, but registered users are limited to eight stories every 30 days. After viewing three metered stories, you'll be asked to register or log in. After eight more stories in 30 days, you'll be asked to subscribe.

Lawmakers OK $195M Detroit package, send to Snyder

A $195 million contribution to resolve Detroit’s bankruptcy passed the Michigan Senate, which sent the legislation to Republican Gov. Rick Snyder for his signature.

The package of bills, which is crucial to Snyder’s plan to help the city regain its footing, also would create a commission to oversee Detroit’s finances. Emergency Manager Kevyn Orr plans to complete by October the reduction of $18 billion in debt that led to the largest U.S. municipal bankruptcy.

“This is a great day in Michigan history,” Snyder told reporters after the vote. “This is a historic day for Detroit’s future. Detroit is on the comeback path.”

Detroit, home of General Motors Co. and a former industrial powerhouse, has shrunk in population to around 700,000 from 1.8 million in 1950. Now, 38 percent of households are below poverty level, according to the U.S. census. About half of its debt is pension and retiree health-care liabilities.

The money approved Tuesday is part of a court-mediated agreement to raise $816 million from the state, foundations and Detroit’s art museum to reduce benefit cuts to pensioners and protect city-owned masterpieces from sale to pay creditors. The deal would collapse without the state money, and pensioners would face larger reductions in monthly benefits, Orr has warned.

Retiree health

Snyder encouraged retirees and tens of thousands of other creditors to vote for the settlement plan, which Orr submitted to U.S. Bankruptcy Judge Steven Rhodes.

“A protest vote is not helpful,” said Snyder, who was joined at the Lansing press conference by Orr, legislative leaders and U.S. Judge Gerald Rosen, who led the mediation that brokered the deal.

In another move to aid the settlement, the Detroit-based Skillman Foundation agreed to donate $3.5 million toward retiree health benefits, court mediators announced. The foundation primarily funds programs that help children.

“In making this very meaningful and inspiring commitment, the Skillman Foundation is focused on putting kids first and preserving health care benefits for Detroit families with children and grandchildren,” a statement by the mediators said.

House approved

The state House of Representatives approved the aid legislation last week. Both chambers are controlled by Republicans, whose leaders supported Snyder’s pledge to assist the predominantly Democratic city. While Snyder proposed giving $350 million over 20 years, lawmakers chose to donate a lesser lump sum from a surplus fund.

Rep. Thomas Stallworth, a Detroit Democrat, told senators Tuesday that the aid package is “a moral imperative” because of the impact on retirees.

Annie Patnaude, spokeswoman for the Michigan chapter of Americans for Prosperity, testified against the plan. She said Detroit should sell assets, including the art collection, to pay all creditors, instead of taking a handout.

“What’s more important, a painting on the wall or somebody’s pension?” Patnaude told the committee.

The organization funded by billionaire industrialist brothers David and Charles Koch is planning a campaign against lawmakers who vote for the Detroit aid.